Pfizer cannot use UK as tax haven, Cable tells MPs
- 6 May 2014
- From the section Business
Business Secretary Vince Cable has told MPs the government will not let Pfizer use the UK as a tax haven and promised to secure British science jobs.
The move comes after concerns were raised by MPs about the proposed takeover of UK pharmaceutical giant AstraZeneca by its US rival Pfizer.
Mr Cable was called to answer urgent questions in the House of Commons earlier.
He said he was "alive" to national interest concerns over the deal.
Mr Cable said: "We see the future of the UK as a knowledge economy, not as a tax haven. Our focus is on what is best for the UK - securing great British science, research and manufacturing jobs and decision-making in the life sciences sector."
He added the government was committed to "ensuring the UK remained at the forefront of life sciences, research and development".
The government may also consider expanding its public interest test powers, the Business Secretary said.
"This would be a serious step and not one that should be taken lightly. I am open-minded about it, but should stress that we are operating within serious European legal constraints," he added.
The public interest test gives ministers the power to intervene in takeover deals and mergers in a limited number of instances.
These include national security concerns, media company mergers and banks.
The current test does not give the government scope to address concerns about jobs or research and development investment raised by the potential Pfizer takeover.
But on Sunday Mr Cable said he was considering all options, including reviewing the terms under which the public interest test could be applied, to protect Britain's scientific research base.
Earlier on Tuesday, the former chief executive of AstraZeneca told the BBC's business editor Kamal Ahmed he feared Pfizer would act like a "praying mantis" and "suck the lifeblood" out of AstraZeneca.
Sir David Barnes was chief executive of AstraZeneca until 2000 and deputy chairman until 2002.
Sir David said tax was "one of the key drivers " behind the Pfizer offer for AstraZeneca, rather than a long-term commitment to research and development.
"That is a very narrow basis on which to base such a massive task," Sir David told the BBC.
"The risk is that the past history of Pfizer has shown that they tend to extract destructive synergies, they have done that in the past.
"I have a great concern that they will act like a praying mantis and suck the lifeblood out of their prey."
Pfizer offered £63bn for the UK pharmaceutical giant on Friday.
If the deal were to go ahead, it would be the biggest takeover in UK corporate history.
The offer - the second Pfizer has made for AstraZeneca - was immediately rejected by the board of the UK pharmaceutical firm, which said Pfizer continued to "significantly undervalue" the company.
MPs are preparing to investigate the proposed takeover deal.
Two parliamentary select committees - the Business Select Committee and the Science and Technology committee - have said they intend to summon the bosses of both companies to answer questions.
The Business Committee hearing is likely to happen "quite soon" and possibly within the next week, the BBC has learned.
Science and technology committee chair Andrew Miller said that there was "serious concern - to say the least" about the proposed takeover.
The committee "wants a lot more information" about the effect of the deal on UK science and intellectual property, he said.
Mr Miller confirmed he would be urging his committee to call senior executives from both companies.
Earlier, the Prime Minister's spokesman said the deal had been discussed in Cabinet, and that both David Cameron and Mr Cable were in "complete agreement" over the government's approach to the Pfizer proposal.
Downing Street added the government was sticking to a policy of "active engagement" with both Pfizer and AstraZeneca, while not interfering with what was ultimately a decision for shareholders.
The PM's spokesman said it was "significant that Pfizer has sought engagement... to understand the government's views and the approach".
The spokesman added it was "entirely a matter for the companies, their boards and their shareholders". But the government still wanted "engagement" regarding scientific research and development.
At the weekend, Labour leader Ed Miliband called for an inquiry into the proposal.
"We need a proper, independent assessment of whether this [deal] is in our national interest," Mr Miliband told the BBC.
No 10 denied Labour allegations that it was acting as a "cheerleader" for the deal, saying it was fighting for British jobs and British science.
AstraZeneca employs more than 51,000 staff worldwide, with 6,700 in the UK. Pfizer has a global workforce of more than 70,000, with 2,500 in the UK.
AstraZeneca's management team is holding a presentation for investors and analysts on Tuesday to promote its own achievements and to demonstrate the firm's "excellent growth prospects".
In a shareholder update on Tuesday, it forecast annual revenues of greater than $45bn (£26.6bn) by 2023. The company had revenues of $25.7bn in 2013.